# Appendix — Illinois Commerce Commission v. Illinois Central Railroad

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1945
- **Citation:** 324 U.S. 823

## Text

1s

APPENDIX ‘‘1’’

**See. 1300.901 Definition. For the purpose of this
Procedural Regulation No. 11, a general increase in the
rates or charges of a common carrier or other public
utility is defined as any change in its rates, fares,
classifications, rules, regulations or practices which
results in an increase in the charges for transporta-
tion or other public utility service applicable to a class
of passengers, shippers or customers, including in-
ereases in wholesale or industrial rates or charges
for public utility services, as distinguished from an in-
crease of rates or charges applicable to a particular
customer or transportation service under special ar-
rangement.

**See. 1800.902. General requirements with respect to
notices. Thirty (380) days before the effective date of
a general increase in the rates or charges of any com-
mon carrier or other publie utility, there shall be filed
with the Transportation and Public Utilities Division
of the Office of Price Administration, Washington,
D. C., two copies of notice of such proposed increase,
except as otherwise provided in paragraphs (d) and
(e) of See. 1800.904. Such notices shall be deemed to
have been filed when received in the Office of sueh
Division. If authority for the establishment of any such
inerease is required by any regulatory ageney, notice
shall be given on or before the time such authority is
sought in order that the Price Administrator may have
timely opportunity to intervene, but in no event shall
such notice be given less than 30 days before such pro-
posed increased rates or charges are to become etfee-
tive. All notices shall state the name and address of the
Federal, State or municipal authority having jurisdie-
tion over the rates or charges in question.

‘*Hach such notice shall contain a statement that the
common carrier or other publie utility consents to the
timely intervention by the Price Administrator, on be-
half of the Director of Keconomie Stabilization, before

19

the Federal, State or municipal authority having juris-
diction to consider such increase.

“One copy of each notice must be over the signature
of an executive officer, a responsible traffic officer, or a
duly authorized attorney or agent of the carrier or
other public utility. Duly authorized officers of cor-
porate agents shall sign on behalf of such agents. The
person signing the notice shall certify that the infor-
mation contained therein is true to the best of his
knowledge, information and belief.’’

APPENDIX ‘‘2”’

Docket Nos. 27894-8, Cons.—Agenda 23—May, 1944

Joseph B. Fleming cf al., Trustees of the Chicaga, Rock
Island and Pacific Railway Company, Appellants, v. Tli-
hois Commerce Commission, Appellee.—Chicago, Bur-
lington & Quincey Railroad Company, Appellant, v.
Same Appellee.—Ilenry A. Seandrett ef al., Trustees of
Chicago, Milwaukee, St. Paul and Pacifie Railroad Com-
pany, Appellants, v. Same Appellee.—Chicago and West-
ern Indiana Railroad Company, Appellant v. Same Ap-
pellee.—A. A. Sprague et al., Receivers of Chicago North
Shore and Milwaukee Railroad Company, Appellants, v.
Same Appellee.

Mr. Jusrice Smira delivered the opinion of the court:

In this cause five cases have been consolidated for de-
cision and opinion. The eases consolidated are No. 27894,
Fleming ef al., Trustees of The Chicago, Rock Island and
Pacific Railway Co. v. Hlinois Commerce Commission:
No, 27899, Chicago, Burlington & Quiney Railroad Co.
v. Same; No. 27896, Seandrett ef al., Trustees of Chicago,
Milwaukee, St. Paul and Pacifie Railroad Co. v. Same:
No, 27897, Chieago and Western Indiana Railroad Co. vy.
Same; No. 27898, Sprague cf al., Receivers of Chicago
North Shore and Milwaukee Railroad Co. v. Same. Kach
of the cases is an appeal under section 69 of the Publie

20

Utilities Act (IIL Rev. Stat. 1943, chap. 11193, par. 73,)
from an order of the cireuit court of Cook county, affirming
an order of the Commerce Commission.

Following the granting by the Interstate Commerce
Commission of an inerease of 10 per cent in’ through
passenger rates generally, and in one-way and round-trip
suburban rates in the Chicago suburban area, each of the
appellants filed with the Tlinois Commerce Commission
tariffs proposing a like increase in commutation or multiple-
ride ticket rates in its suburban service in the Chicago area.
The rates proposed by the tariffs were to become effective
on Mareh 8, 1942.) The commission, however, entered an
order in each ease suspending the proposed rates and set
the case for hearing. Hearings were had. The hearings
were concluded in May, 1942, and the cases were taken
by the commission for decision. The final order and de-
cision of the commission was filed in the first three cases
on November 24, 1942, and in the other two cases on
December 9 and December 22, 1942, respectively. By these
orders the commission denied the proposed increase in rates
and permanently suspended the tariffs filed. Separate ap-
peals from these orders were duly and timely perfected to
the cireuit court of Cook county. Upon a hearing the cir-
euit court affirmed the order of the commission in each case.

It is here contended by appellants that the orders of
the commission should be reversed and set aside for the
reason that such orders do not contain suflicient and essen-
tial findings of fact; that they are based upon speculation
and conjecture and contain erroneous conelusions and re-
eitals: that said orders are unreasonable and unlawful;
that the commission disregarded the evidence and consid-
ered matters wholly outside the record and which were not
in evidence.

Before considering the other questions involved it: will
be necessary to dispose of appellee’s contention that the
commission could not approve the proposed rates because
of the alleged failure of appellants to comply with the
pertinent provisions of the 1942 amendment to the Mmer-
veney Price Control Act. (50 U.S. C. A. appendix 961.)
That amendment provides: ‘Provided, That no common

21

varrier or other publie utility shall make any general in-
erease in its rates or charges which were in effect on Sep-
tember 15, 1942, unless it first gives thirty days’ notice to
the President, or such ageney as he may designate, and
consents to the timely intervention by such agency before
the Federal, State, or municipal authority having jurisdic-
tion to consider such inerease.”’

As already noted, the hearings in these cases were con-
cluded in’ May, 1942. The cases were then taken by the
commission for decision. The above amendment to the
Emergeney Price Control Act was not passed until Octo-
ber 2, following the submission of the cases. In some of
the cases the records show that after the orders of the com-
mission were entered, and while the cases were still pending
before the commission, notice was eiven in accordance with
that act. There was no appearance by the Director of Keo-
nomie Stabilization or the Price Administrator of the Office
of Price Administration, either before the commission or
in the cireuit court. The failure to give such notice did
not affeet the jurisdiction or powers of the commission, nor
in any way change or enlarge the issues. That act only
vives to the Director of Meonomic Stabilization the right
to intervene and be heard. It in nowise, affeeted the juris-
diction of the commission. Vinson v. Washington Gas
Light Co., 821 U.S. 489, 64S. Ct. 731, is decisive on this
question. It was there said: ‘*The Emergency Price Con-
trol Act of 1942, while it gives the Administrator power
over prices of ‘commodities,’ which ate not €enerally reg-
ulated by publie authority, specifically and expressly with-
holds from the Administrator jurisdiction over public
utility rates. And, as we have noted, the Stabilization Act
of October 2, 1942, did not alter this prohibition but re-
quired merely that no utility should generally increase rates
in effect September 15, 1942, unless it first gave thirty days’
notice to the President or his representative and consented
to the timely intervention of that representative before the
federal, state, or municipal authority having jurisdiction to
consider the increase. It is not clear that this language eon-
fers a right of intervention. The bill as passed by the
Senate contained a provision that there should be no in-
crease in utility rates unless they were approved by the

ee ee

22

President. The House refused to concur, with the result
that only the language now contained in the proviso ap-
peared in the bill. The assertion that, while the Price Ad-
ministrator or the Director may present his views to the
regulatory body ‘he had nothing to say about its decision,’
was made and not contradicted on the senate floor in dis-
cussion of the conference report. Evidently Congress in-
tended to grant the Administrator plenary control over
commodity prices, since they generally were not the subjcet
of loeal regulation, but in both the original Act and the
i as this c ourt has recently said in Davies Ware-
house Co. v. Bowles, 321 U. S. 144, 64 S. Ct. 474, 480,
was pln ‘to avoid paralyzing or extinguishing local in-
stitutions.” Thus it limited the right of the Executive to
notice by the utility and the utility’s consent that the Exeeu-
tive mieht be heard by the regulatory body having: final
authority inthe premises. * * * Weareasked then, not
re to revise the views expressed in Davies Warehouse Co.
. Bowles, supra, as to the scope of the Acts, but to infer
an a general expression of congressional poliey, the lim-
itation of existing powers conferred by daw on regulatory
commissions throughout the nation, both state and federal,
and the endowment of a different federal ageney with new
and superior rights and powers. This we are unable to do.”’
The failure to give such notice would not, in any event,
affect the jurisdiction or powers of the commission or alter
its duties in a matter of this kind. The contention of ap-
pellee on this branch of the case cannot be sustained.
Four of the ‘ases, viz.: Nos. 27894, 27895, 27896 and
27898, involved common questions and may be considered
together. A brief reference to the character of the sub-
urban service rendered by appellants in those cases will not
be inappropriate. The record in cause No. 27894, Fleming
et al., Trustees of The Chicago, Rock Island and Pacific
Railroad Co. v. Illinois Commeree Commission (hereinafter
referred to .as the Rock Island ease,) shows that the Rock
Island operates suburban service over its main line from
Chicago to Joliet, a distance of 40.2 miles. The Chicago
terminus is LaSalle Street Station, whieh is used jointly
with the New York Central. That station and also the
tracks and other facilities between that station and Joliet

23

are used by both through and suburban trains. Commuta-
tion and other suburban passengers are carried on both. It
also operates a suburban line which branches off from the
main line at Gresham, Kighty-ninth street, Chicago, and
extends westerly and southerly to Blue Island, where it
again connects with the main line. The length of the sub-
urban line is 6.7 miles. The tracks and other facilities of
this suburban line are used exclusively in the suburban
service.

In No. 27895, Chicago, Burlington & Quincy Railroad
Co. v. Hlinois Commerce Commission (hereinafter referred
to as the Burlington case,) the record shows that the rail-
road company operates suburban service between Chicago
and Aurora, and intermediate stations, a distance of 38
miles. The Chicago terminus is the Union Station. The
suburban service is operated over its main line. Commu-
tation and other suburban passengers are carried on both
suburban and through trains.

In No. 27896, Scandrett ef al., Trustees of Chicago, Mil-
waukee, St. Paul and Pacific Railroad Co. v. Illinois Com-
merce Commission, (hereinafter referred to as the Milwau-
kee case,) the record shows that the suburban service is
operated over two lines of railroad. One of these lines
extends from Union Station in Chicago to Elgin, a distance
of 36.6 miles, while the other extends from Union Station
to Walworth, Wisconsin, a distance of 73.2 miles. The
tracks and other facilities used by it in its suburban service
are also used in the transportation of through freight and
passengers,

In No. 27898, Sprague ef al., Receivers of Chicago North
Shore and Milwaukee Railroad Co. yv. Illinois Commerce
Conmnission, (hereimafter referred to as the North Shore
case.) the railroad operates suburban service between Chi-
cago and Waukegan and Chicago and Mundelein, and inter-
mediate stations. Most of its suburban service is conducted
over what is known as the Shore Line, extending from
the Chicago Loop District, north to Waukegan. It also
operates suburban trains over what is designated as the
Skokie Line. This line branches off the Shore Line at
foward street and runs north to Milwaukee, Wisconsin.
At Lake Bluff it connects with a line extending westerly

24

to Mundelein. Through passenger and freight business is
also conducted over the Skokie Line.

In each case testimony and exhibits were admitted in
evidence showing a substantial deficit in the income from
the operation of the suburban service for the vear 1941,
and prior to that time. In no case would the proposed
increase in rates be sufficient to overcome the deficit shown.
In other words, had the proposed increase in rates been
in force during the vear 1941, there would still be a sub-
stantial deficit from the operation of the suburban service.

In the Rock Island case and in the Burlington case, ex-
hibits and testimony were offered showing the value of the
property and facilities used and useful in the suburban
service. These values were based on the original cost of
the facilities, except land. The land values used were the
appraisals fixed by the Bureau of Valuation of the Inter-
state Commerce Commission. In the Milwaukee case and
the North Shore case no evidence of the value of prop-
erties and facilities used and useful in the suburban service
was offered. In those cases appellants take the position
that inasmuch as the proof before the commission showed
that the proposed increase in rates would not be sufficient
to wipe out the deficit arising from the operation of the
suburban service, the value of the property and the facili-
ties used and useful in that service is immaterial.

In all four of the cases there was testimony and exhibits
showing the allocation of direct expense to the suburban
service and the apportionment of expenses jointly incurred
in that service and the through passenger and freight and
express service. The bases of such allocation and appor-
tionment were given in detail. No evidence was offered ex-
cept that introduced by appellants. Throughout the briefs
of appellee, complaint is made that the apportionment of
joint operating expenses was made only as between the sub-
urban service and the through passenger and freight service,
and that no division or apportionment was made of the
expenses assigned or allocated to the suburban service, as
between the commutation and the one-way and round-trip
suburban service. It is argued that the portion of both
direct and joint operating expenses allocated to the
suburban service as a whole should have been further

25

hroken down and segregated to the commutation service as
distinct from the one-way and round-trip suburban service.
The testimony and the exhibits before the commission show
that the rates for one-way and round-trip fares were higher
than the commutation fares; that the one-way and round-
trip fares had been increased 10 per cent by the order
kv Parte 148 of the Interstate Commerce Commission,
eutered on January 21, 1942. It is, therefore, obvious
that inasmuch as the commutation rates were lower than
the one-way and round-trip fares a further refinement of
operating expenses and segregation of those expenses be-
fveen the commutation service and other suburban service
would only aggravate and increase the deficit in the com-
mutation service. The commutation passengers and the
one-way and round-trip passengers use the same facilities
and are viven identical service. The cost of carrying the
commutation passenger would, therefore, be the same as
the cost of carrying the passenger riding on a one-way or
round-trip ticket. The evidence shows that the commuta-
tion rates produce a lower passenger-mile revenue than the
one-way and round-trip fares.

Appellee also complains that in some of the cases there
was no proof of the value of the facilities used and useful
in the suburban service and in others that such values as
were shown were not segregated between the commutation
service and the one-way and round-trip suburban service.
Reference has already been made to the showing in each
case that the proposed increase in rates would be insufficient
to overcome the deficit from the operation of the suburban
service. The earriers were not seeking a return on any
investment. They were merely seeking an increase in rates
in order to reduce the operating deficits. In view of this
evidence before the commission, the question of the value
of the facilities used and useful in the suburban commuta-
tion service was academic. The commission also complains
in its orders and in its briefs that there was no proof
offered as to the original cost of the facilities used in the
suburban service, less depreciation; the cost of reproducing
the properties-and facilities, less depreciation, or, the pru-
dent investment in such facilities and land, fairly and justly.
used in rendering the suburban service.

dy

——-

26

As already related, the proof that was offered on the
question of the value of the facilities used and useful in
the suburban service was on the original cost basis. If
the commission was of the opinion that the value of
the property used and useful in the commutation service
was material and that some other formula should be used
in arriving at such values, it should have indicated the for-
mula it would approve and required evidence to be offered
on the basis of such formula. It could then have made a
finding on the question of such value which could be re-
viewed by the courts, as contemplated by the Publie Utili-
ties Net. A hearing before the commission is not a partisan
hearing with the commission on one side arrayed against
the etifitv on the other. It is an administrative investiga-
ticu instituted for the purpose of ascertaining and making
findimes of facet. It was manifestly arbitrary and unfair
to raise in its final order, for the first time, the question
of the correctness of the formula and the basis on which
the evidence concerning the value of the property for rate
tiaking purposes was offered.

The commission also, in discussing the evidence in its
orders relating to the allocation of joint expenses to sub-
urban service, repeatedly asserts that such evidence could
not be considered, beeause the commission was of. the
opinion the portion of such expenses charged to the sub-
urban service was too high. In other words, the commis:
sion repeatedly asserts in its orders that it disregards the
evidence and acts upon its own opinion and conclusions,
not based upon any evidence in the case. In this the com-
Inission Was in error.

At the request of the examiner during the hearings,
~tatements of the system income of each of the carriers
for a portion of the vear 1942, as compared with like
periods in 1941, were produced and admitted in evidence
over the objection of the carriers. These exhibits showed
only the total income from all classes of business, both
freight and passenger, including both through and_ sub-
urban, transported over the entire system, for the periods
indieated. There was no attempt to show that any part
of the inerease in revenue shown by these exhibits was
applicable to, or derived from, the suburban service or any

27

branch of such service. Based upon this increase in the
incomes from the entire systems, the commission, in its
orders, speculated that there had probably been a substan-
tial increase in revenue from the suburban service during
the vear 1942, as compared with the year 1941. This was
a pure speculation and an assumption by the commission,
without any evidence in the record to support it. These
exhibits did not show an increase in suburban revenues
and afforded no basis for such conclusions.

The commission, in its orders, also recites that an exam-
ination of ‘*Moody’s Railroads, Weekly Cumulative Index,
Volume 14, No. 23, issued Oct. 28, 1942 and No. 24, issued
Oct. 31, 1942,’" showed that the gross operating revenues
of the one hundred twenty-three Class I carriers of the
United States for the nine-month period ending September
9), 1942, increased approximately 36.9 per cent over the
corresponding period of 1941. From this and from the in-
crease in the system revenues of appellants during a por tion
of the year 1942, over a like period of 1941, the commission
reached the conclusion that during the vear 1942, appellants
had probably enjoyed a substantial increase in revenues
from suburban commutation service and were not entitled
to the proposed increase in rates. In this connection it
should be noted that the publications referred to were not
offered in evidence and were not published until October 28
and 31, 1942, after the hearings. were concluded in May, 1942.

In Atchison, Topeka and Santa Fe Railway Co. v. Com-
merce Com, 335 ML. 624, we said: ‘*The commissioners can-
not net on their own information. Their findings must be
based on evidence presented in the case, with an oppor-
tunity to all parties to know of the evidence to be submitted
or considered, to cross-examine witnesses, to inspect docu-
ments and to offer evidence in explanation or rebuttal, and
nothing can be treated as evidence which is not introduced
as such.”’

The dominant note of the approach of the commission
to the consideration of the questions involved is epitomized
in the following quotation from its order in the Milwaukee
case: “Tt must be remembered that Respondent’s opera-
tions embrace thousands of miles of railroad and runs
through practically all states in the Northwest; that it oper-

28

ates through passenger service from and to and through the
suburban zone to the principal cities in western territory;
that the railroad was built and operated primarily for the
conduct of through freight and passenger business; that
suburban service was developed as communities developed
in the Chicago area; that the equipment used in the sub-
urban service, for the most part, is equipment that has been
previously used in through service; and that suburban serv-
ice is more or less a byproduct of railroad operations as
a whole and any revenue over out-of-pocket expense re-
ceived contributes that much to the financial-prosperity of
the carrier.”’

This language reflects the attitude of the commission
in the consideration of the suburban service. The basis
for this theory of the commission is contrary to law. In
Northern Pacific Railway Co. v. North Dakota, 236 U.S.
585, 59 L. ed. 735, it was said: ‘*We have, then, to apply
these familiar principles to a case where the state has at-
tempted to fix a rate for the transportation of a commodity
under which, taking the results of the business to which
the rate is applied, the carrier is compelled to transport
the commodity for less than cost, or without substantial
compensation in addition to cost. We say this, for we
entertain no doubt that, in determining the cost of the
transportation of a particular commodity, all the outlays
which pertain to it must be considered... We find no basis
for: distinguishing in this respect between so-called ‘out-
of-pocket costs,’ or ‘actual’ expenses, and other outlays
which are none the less actually made because they are
applicable to all traffic, instead of being exclusively in-
curred in the traffie in question. Illustrations are found
in outlays for maintenance of way and structures, general
expenses and taxes. It is not a sufficient reason for ex-
eluding such, or other, expenses to say that they would
still have been incurred had the particular commodity not
been transported: That commodity has been transported;
the common carrier is under a duty to carry, and the ex-
penses of its business at a particular time are attributable
to what it does earry. The state cannot estimate the cost
of carrying coal by throwing the expense incident to the
maintenanee of the roadbed, and the general expenses,

29

upon the carriage of wheat; or the cost of carrying wheat
by throwing the burden of the upkeep of the property upon
coal and other commodities. This, of course, does not
mean that all commodities are to be treated as carried at
the same rate of expense. The outlays that exclusively
pertain to a given class of traffic must be assigned to that
class, and the other expenses must be fairly apportioned.
It mav be diffieult to make such an apportionment, but
when conclusions are based on cost, the entire cost must
be taken into account.”

In Norfolk and Western Railway Co. v. Conley, 236
U.S. 605, 59 TL. ed. 745, the rule was announced as fol-
lows: The fundamental question presented is whether the
validity of the passenger rate can be determined by its
effect upon the passenger business of the company, sepa-
rately considered. What has been said in the opinion in
Northern Pacific Railway Co. v. North Dakota, decided
this day (286 U.S. 585, ante 739, 35 Sup. Ct. Rep. 429.)
makes an extended discussion of this question unnecessary.
It was recognized that the state has a broad field for the
exercise of its discretion in prescribing reasonable rates for
common carriers within its jurisdiction; that it is not
necessary that there should be uniform rates or the same
percentage of profit on every sort of business; and that
there is abundant room for reasonable classification of the
adaptation of rates to various groups of services. It was
further held that despite this range of permissible action,
the state has no arbitrary power over rates; that the de-
votion of the property of the earrier to public use is quali-
fied by the condition of the carrier’s undertaking that its
services are to be performed for reasonable reward; and
that the state may not select a commodity or class of traflic.
and instead of fixing what may be deemed to be reasonable
compensation for its carriage, compel the ‘arrier to trans-
port it either at less than cost, or fora compensation that
is merely nominal. These considerations are controlling
here. The passenger traffie is one of the main depart-
ments of the company’s business; it has its separate equip-
ment, its separate organization and management, and, of
necessity, its own rates. In making a reasonable adjust-
ment of the carrier’s charges, the state is under no obli-

30

vation to secure the same rate of return from each of
the two principal departments of business, passenger and
freight; but the state may not select either of these de.
partments for arbitrary control. Thus, it would not be
contended that the state might require passengers to be
carried for nothing, or that it could justify such action by
placing upon the shippers of goods the burden of excessive
charges in order to supply an adequate return for the car-
rier’s entire service.”’
In Banton v. Belt Line Railway Corp., 268 UL S. 415¢
45 S. Ct. 534, it was said: ‘‘There is involved only the
rates applic ible to a part of the company’s business. In
this respect, the case is similar to Northern Pacific Railway
North Dakota, 236 U. S. 585, 355 S. Ct. 429, 59 L. ed.
L. R. A. 1917F, 1148, Ann. Cas. 1916A, 1; Norfolk
and Western Railway vy. West Virginia, 256 U.S. 605,
bo 8S. Ct. 487, 59 L. ed. 749; and Northern Pacific Rail-
way Vv. Department of Public Works of Washington, 268
U.S. 29, 45 St. Ct. 412, 69 L. ed. 836, decided April 18,
1925. The opts law is plain. The state is without
power to require the traffic covered by the fare enjoined
to be carried at a loss or without substantial compensation
over its proper cost. And such cost includes not only the
expenditures, if any, incurred exclusively for that. traffic,
but also a just proportion of the expenses incurred for all
traffic of which that in question forms a part. The cost
of doing such business is not, and properly cannot be,
limited to the amount by which total operating expenses
would be diminished by the elimination of, or increased by
adding, the transfer passengers in question. It would be
arbitrary and unjust to charge to that class of Dusiness
only the amount by which the operating expenses were,
or would be, increased by adding that to the other traffic
carried, Outlays are none the less attributable to transfer
passengers because also applicable to other traffic. Oper-
ating expenses which are incurred on account of all pas-
sengers carried, and which are not capable of direct allo-
cation to any class, should be attributed to the transfer
passengers in question in like proportion as such expenses
are fairly chargeable to other passengers receiving like

31

service. While the carrier has no constitutional right to
the same rate er percentage of return on all its business,
the state may not select any class of traffic for arbitrary
control and regulation.”’

In Mt. Carmel Public Utility and Service Co. v. Public
Utilities Com., 297 ll. 303, this court said: ‘* Where a
public utility corporation is engaged in furnishing to the
public, through various departinents of its business, differ-
ent kinds of service, it cannot be compelled to carry on a
branch of its business which furnishes one kind of such
service at a loss even though at the same time its whole
business may be conducted at a profit. (Brooks-Scaulon
Co. v. Railroad Com., 251 U.S. 3896; Northern Pacific
Railroad Co. v. North Dakota, 236 id. 585; Norfolk and
Western Railroad Co. v. West Virginia, 236 id. 605.)”’
To the same effect is Northern Illinois Light and Traction
Co. ¥. Commerce Com, 802 Th, 11.

In Smyth vo Ames, 169 U.S. 466, 42 L. ed. 819, it was
said: ‘‘In our judement, it must be held that the reason-
ableness or unreasonableness of rates prescribed by a state
for the transportation of persons and property wholly
within its limits must be determined without reference to
the interstate business done by the carrier, or to the profits
derived from it. The state cannot justify unreasonably
low rates for domestic transportation, considered alone,
upon the ground that the carrier is earning large profits
on its interstate business, over which, so far as rates are
concerned, the state has no control, Nor can the carrier
justify unreasonably high rates on domestic business upon
the ground that if will be able only in that way to meet
losses on its interstate business. So far as rates of trans-
portation are concerned, domestic business should not be
made to bear the losses on\ interstate business, nor the
latter the losses on domestic business. It is only rates for
the transportation of persons and property between points
within the state that the state can prescribe; and when it
undertakes to preseribe rates not to be exceeded by the
carrier, it must do so with reference exclusively to what
is just and reasonable, as between the carrier and the pub-
lic, in respect of domestic business. The arguinent that a

32

railroad line is an entirety; that its income goes into, and
its expenses are provided for out of, a common fund; and
that its capitalization is on its entire line, within and with-
out the state,—can have no application where the state is
without authority over rates on its entire line, and can
only deal with local rates and make such regulations as
are necessary to give just compensation on local business.”

In our opinion, the law as there stated, is still in full
force and effect. The commission proceeded under a mis-
apprehension of the settled rules of law applicable to the
questions under consideration. This misconception of the
applicable principles of law led the commission to the erro-
neous conclusions recited in its orders.

The orders cannot be sustained for the further reason
that they contain no proper and essential findings. See-
tion 65 of the Public Utilities Act (TIL Rev. Stat. 1945,
chap. 11125, par. 69,) provides that the commission shall
make and render findines concerning the subject matter
and facts inquired into, and enter its order based thereon.
In Chicago Railways Co. ve Commerce Com. ex rel. Clu-
cago Motor Coach Co., 336 Til. 51, we said: ‘*Seetion 65
of the Commerce Commission act requires the commission
to make and enter findings concerning the subject matter
of facts inquired into and enter its order based thereon.
Such findings must be specific enough to enable the court
to review intelligently the decision of the commission and
ascertain if the facts on which the commission has based
its order afford a reasonable basis for it.’

In Lowisrille and Nashville Railread Co. ve Commerce
Com. cx rel. Village of Belle Rive, 353° Wh 3875, it) was
said by this court: ‘‘Section 65 of the Public Utilities act
(Cahill’s Stat. 1981, par. 84,) requires that the commission
make and enter findings of fact concerning the subject mat-
ter inquired into and enter its order based thereon. This
is a mandate that the commission make findings of fact
upon the principal issues of the case, and that such findings
be sufficiently specific to enable the court to intelligently
review the decision of the Commerce Commission and
ascertain if the facts upon which the commission has based
its order afforded a reasonable basis for sueh order. If

33

they do, the facts found may be re-examined, in connection
with the evidence, to determine if they are substantially
supported by the evidence, but this court will not enter
upon an independent investigation of the evidence to de-
velop facts not found by the commission to sustain its
order. (Chicago, Rock Island and Pacific Railway Co, v.
Commerce Com, 346 Th 412: Kewanee and Galva Rail-
way Cor ve Commerce Com, 340 id. P66: Business Men's
Ass'n ve Commerce Com. 337 id. 149.)°* To the same
effect are Chicago, Rock Tslaud and Pacific Railway Co, v.
Commerce Com, 346 TL 412: Neaanee and Galva Railway
Co. vy. Commerce Com, cv rel. Dohrn Trausfer Co, 340 TH.
6: Brotherhood of Locomotive Firemen and Eugaemen
vo New York Central Railroad Co, 339 Wk 201, and Busi
ness Men’s Ass'n v. Commerce Com. 837 Tl. 149.

The orders in the four cases here under consideration
do not comply with the mandatory requirements of sec-
tion 65 of the Public Utilities Act. They do net contain
any findings as required by that section. Said orders are
void for the further reason that they are not based upon
the evidence and are predicated upon matters wholly out-
side the evidence offered before the commission. They
are in form merely arguinents and conclusions based upon
assumptions and speculations and are not supported by the
evidence in the records. The orders are arbitrary, unrea-
sonable and unlawful, and cannot be sustained.

This brines us to the consideration of cause No. 27807,
Chicago and Western Indiana Railroad Co. v. Tlinois Com:
meree Conunission. The record in this ease presents a
somewhat different: picture. The Chicago and Western
Indiana Railroad Co. (hereinafter referred to as Western
Indiana.) is primarily a terminal company. Tt furnishes
stations and other facilities for the use of six trunk line
‘ailroads. It owns and operates Dearborn Street Station
in Chieagwo. It also owns various tracks extending from
said station to Dolton, Hlinois, a distance of 16.6 miles,
together with stations, signals, shops, vards, roundhouses
and other facilities used in connection therewith. Its cap-
ital stock is owned in equal parts by five other railroads,
namely: Chieago & Eastern Hlinois, Grand Trunk, Wa-

34

bash, Monon, and Erie. These companies also lease from
the Western Indiana the right to use Dearborn Station and
other facilities, including tracks and right of way between
said station and Dolton, Illinois. These Jessee companies
will be hereinafter referred to as proprietary tenants. A
sixth company, the Atchison, Topeka & Santa Fe (herein-
after referred to as Santa EFe,) is also a tenant. The Santa
Fe uses the Western Indiana rails and terminal facilities,
but it owns no interest in that company. Each of the
proprietary tenants pays a rental equal to one fifth of the
interest requirements on the outstanding bonds of the
Western Indiana, in so far as those bond issues cover the
property which is used in common by said proprietary ten-
ants. Hach of said tenants likewise pays a rental equal to
100 per cent of the bond interest requirements applicable
fo the portion of the property which it uses exclusively,
The Santa Fe has a 999 vear lease, under which it uses
the Deaborn Station and the Western Indiana tracks and
terminal facilities between Twentieth street and Dearborn
Station, which is a part of the Dearborn Station-Dolton
line. It pays a stated rental in addition to one sixth of
the cost of additions and betterments to the property which
it uses in common with the other tenants.

The Western Indiana also owns other properties con-
sisting of extensive vards and other facilities which are
leased to the Belt Railway Company of Chicago. These
properties, however, are not a part of the Western Indiana
tracks and facilities, extending from Dearborn Station to
Dolton. The property leased by the Belt Railway Company
is used exclusively by that company. It maintains the
leased property and pays stated rentals which are in excess
of the interest requirements on bonds issued by the Western
Indiana, representing money expended on the property
leased to the Belt. The Elein, Joliet & Kastern also leases
from the Western Indiana other tracks and facilities whieh
are not a part of the line of railroad extending from Dear-
born Station to Dolton, and not a part of the properties
leased to the Belt. It pays a fixed rental which is not re-
quired for interest payments. The amount of these rentals
is not otherwise disclosed by the record,

35

Various portions of the line extending from Dearborn
Station to Dolton are used by the five proprietary tenant
lines and the Santa Fe, in common with the Western In-
diana. This line is divided into some 50 wheelage zones
or sections, The common or joint expenses of maintenance
and operation are apportioned to the various wheelage zones,
and then in turn such expenses apportioned to each zone
ure apportioned to the Western Indiana and the tenant
lines, using that zone, on a wheelage basis. General expenses
and taxes are apportioned on the same basis. The Western
Indiana does all the switching for the tenant lines at Dear-
horn Station. It operates the Dearborn Station and is
engaged ina small way in freight-switching service for
other railroads, switching cars to and from various indus-
tries located on its own lines. In addition to this service
the Western Indiana also operates a limited suburban pas-
senger service between Dearborn Station and Dolton. In
this service it uses the tracks and facilities extending from
Dearborn Station to Dolton, various sections of which are
used by the six tenant lines. It operates three suburban
passenger trains in each direction daily, except on Satur-
day when the service is reduced. There is no service on
Sunday. In the suburban service it uses train and engine
crews engaged solely and exclusively in that service, It
muploys separate passenger, combination and bageage cars,
devoted solely to that service. It uses two locomotives in
the suburban service. The record shows that during the
last five years preceding the hearings, its net income in
excess of interest requirements was as follows: 1937,
M4117; 1988, $402,120; 1939, $456,651; 1940, $359,-
S43; 1941, $863,667. During that period, each year it
paid from revenues received from rentals and operations,
a6 per cent dividend on its $5,000,000 of outstanding capi-
lal stock, In addition to the payment of this annual divi-
dend, it has aceumulated a surplus of some FSOO,000,
Which is held in its surplus account. Upon its own figures
submitted at the hearings, during the vear 1941, and the
four preceding years, the operation of its suburban service
tlone, disregarding all rentals received, resulted in a sub-
stantial deficit.

36
4

Following the increase in one-way and round-trip sub-
urban rates authorized by the Interstate Commerce Com-
mission, by its order Ex Parte 148, the Western Indiana
filed tariffs with the [linois Commerce Commission, by
which it proposed to increase its commutation or multiple-
ride ticket rates in the suburban service, approximately 10
per cent over existing rates. By the same tariffs it also
proposed a substantial reduction in the one-way or single-
trip ticket fares in that service. It does not carry through
passengers. Its passenge* business is limited to the sub-
urban service between Dearborn Station and Dolton. The
commission entered an order suspending the proposed rates
and set the matter for hearing. Hearings were concluded
in May, 1942. By a» order entered on December 9, 1942,
the commission refused to approve the increase in commnu-
tation rates and permanently suspended the proposed tariffs
as to the commutation rates. It did, however, approve the
proposed reduction in the one-way or single-trip fares. An
appeal from that order was perfected by the railroad com-
pany to the cireuit court of Cook county. Upon a hearing,
that court affirmed the order of the commission. To re-
verse the order of the cireuit court, the appeal was per-
fected to this court.

For the purposes of this case, the property and facilities
leased to the Belt and the Elgin, Joliet & Eastern must
be entirely disregarded. The line from Dearborn Station
to Dolton, which is the line used in the suburban service,
must be considered as the property used in that service.
When so considered, the record shows a line of railroad
extending from Dearborn Station to Dolton, a distance of
16.6 miles. The facilities inelude the Dearborn Station
and all other stations and facilities used in the suburban
service. Certain portions or zones of this line and these
facilities are used by appellant Western Indiana in com-
mon with its six tenants. Under the lease contracts, all
maintenance, operating and other joint expenses are divided
on a wheelage basis between appellant and the six tenants,
according to the zones in whieh the property is used in
common. In the operation of this line and facilities, ap-
pellant, under those leases, incurs its proportionate share

37

of such expenses. The portion of these expenses allocated
to appellant, plus the expenses which are directly incurred
by it in the suburban service, represent the cost to appellant
of furnishing the suburban service. As against this ex-
pense, it receives certain revenues from that service. It
also receives the rentals under the leases from the six ten-
ants for the use of the property used in the suburban
service. On this side of the ledger it has suflicient net
income from its suburban operations and from these rentals
and the rentals received from the Belt and the Elgin, Joliet
& Eastern, to pay all its operating expenses and all interest
requirements and to provide and pay a dividend of 6 per
cent, leaving a substantial balance in its surplus account,
as net profits. This is the showing in the record. The
rentals received from the property used in the suburban
service, for rate-making purposes, must be regarded as in-
come from that property.

If appellant desires and is willing to limit its own opera-
tions to a mere technical compliance with the statute (IIL.
Rev. Stat. 1943, chap. 114, par. 77,) in order to enable it to
lease its facilities to other railroads, it cannot set aside the
rentals received for the payment of its interest require-
ments and dividends and to accumulate a surplus, until the
expenses incurred in the limited operations which it main-
tains are paid. Such expenses are a first charge against
those rentals. Neither ean it pass on to the public any
deficit in its operations in the form of increased rates as
long as it derives a substantial net income from the rental
of its facilities used in the suburban service.

The burden was on appellant to show that the proposed
rates were not unreasonable. While the amount of the
rentals derived from the property used in the suburban
service was not separately shown, it is apparent that sueh
rentals are substantial when compared with the $2206.28
in estimated additional annual revenues which appellant
sought by the proposed inerease in rates. On the whole
record it is clear that when such rentals are properly con-
sidered, as they must be, as revenues arising from the prop-
erty used in the suburban service, no deficit from the opera-
tion of that service, under the existing rates, was shown,

38

When the evidence in the record is considered, it is obvious
that the finding of the commission that the proposed rates
were unreasonable is not without substantial support in the
evidence.

The fixing of rates is essentially a matter of legislative
control. It is not a judicial function. The right to review
the conclusion of the legislature, or of an administrative
body acting under authority delegated to it by the legisla-
ture, is limited to the determination of whether the legis-
lature or administrative body acted within the scope of its
authority, whether the order is without substantial founda-
tion in the evidence, or whether a constitutional right of
the utility has been infringed upon. If the order does not
contravene any constitutional limitation, is within the au-
thority delegated to the commission, and has substantial
basis in the evidence, it cannot be set aside by the courts.
The courts are without authority to set aside an order of
the commission on the facts unless it is against the mani-
fest weight of the evidence, Public Utilities Com. ex rel.
City of Springfield vy. Springfield Gas and Electric Co., 291
Ill. 209.

Upon the record in this case we cannot say that the order
involved is without substantial basis in the evidence or
that such order is either unreasonable or unlawful. The
cireuit court did not err in affirming the order of the
commission.

In cause No. 27897, the judgment of the circuit court is
affirmed. In causes Nos. 27894, 27895, 27896, and 27898, the
judgment in each case is reversed and the cause remanded
to the cireuit court of Cook county with directions to set
aside the order of the commission and to remand the cause
to the commission.

The original records made before the commission were
incorporated in the records filed in this court. The clerk
of this court is directed to return said records to the clerk
of the circuit court of Cook county.

No. 27897, Judgment affirmed;
Nos. 27894, 27895, 27896, and 27898,
Reversed and remanded, with directions.

39

APPENDIX ‘‘3”’
Docket No. 27768—Agenda 15—March, 1944

ILtinois Centra Raitroap Company, Appellee,
v.
Tu Inuiwois Commerce Commission et al., Appellants

Mr, Chief Justice Smirn delivered the opinion of the court:

This is an appeal from a judgment of the superior court
of Cook county under section 69 of the Publie Utilities Act.
(Il. Rev. Stat. 1945, chap. 11124, par. 73.) The eause was
there heard on appeal from the Illinois Commeree Commis-
sion under section 68 of said act. (IIL Rev. Stat. 1943, Chap.
H11%3, par. 72.) On a hearing the trial court set aside the
order of the commission. The appeal to this court was per-
fected by the commission. The proceedings involve only in-
trastate commutation suburban fares in the Chicago sub-
urban area,

A brief reference to the historical background of the pro-
ceedings will be helpful to an understanding of the ques-
tions involved. Prior to December 9, 1925, the Interstate
Commerce Commission granted to the railroads generally
a 20 per cent increase in freight and passenger rates
throughout the country. This increase did not apply to in-
trastate suburban rates. Following the granting of this
increase by the Interstate Commerce Commission, the Ili-
nois Central Railroad Company filed tariffs with the Ilinois
Commerce Commission for a corresponding increase in its
suburban rates in its Chicago suburban area. Qn December
9, 1925, after a hearing, the commission denied the 20 per
cent increase, but granted a 15 per cent increase, over exist-
ing rates.

Thereupon, appellee filed a suit in the Federal District
Court for the Northern District of Illinois for an injunction
to restrain the commission and certain other publie officials
from enforcing the order of the commission and from inter-
fering with appellee in putting into effect the proposed 20
per cent increase in such rates. Application for a tempo-

40

rary injunction was heard on December 26, 1925, by a statu-
tory three-judge court. A temporary injunction was issued.
Thereafter, on January 7, 1928, the cause was heard on the
inerits by a like statutory court. A final decree was entered
making the injunction permanent. No appeal was taken
from that decree. By the decree it was provided:

“That the defendants, and each of them, their attorneys,
agents and representatives, their successors in office, and
all other persons whatsoever, be perpetually restrained and
enjoined from taking any steps whatever to interfere with
the right of plaintiff to charge and collect for commutation
service rendered in Cook County, Illinois, the fares and
charges provided for in Tariffs No. 376 (Illinois Commerce
Commission No. 700,) and No. 377 (Illinois Commerce Com-
mission No. 701,) filed by the plaintiff with the Ilinois Com-
merce Commission; or from instituting any suits or actions
to enforce, so far as plaintiff is concerned, the order of said
Illinois Commerce Commission entered on December 9,
1925, in cause No. 14866 on the docket of said Commission,
or from taking any steps or instituting any proceedings to
impose fines upon, or recover penalties from, plaintiff be-
‘ause of plaintiff’s action in enforeing from and after Janu-
ary 1, 1926, the said tariffs named hereinabove and colleet-
ing the fares and charges provided therein.,’’

Under the protection of the temporary injunction issued
in that case on December 26, 1926, appellee, on January 1,
1926, put into effect the proposed 20 per cent increase in
existing suburban rates and fares in its Chicago suburban
area. At that time appellee’s suburban service and equip-
ment was operated exclusively by steam power. Some
vears later .it was changed to electrical equipment and
power, and has since been operated exclusively as an elee-
tric system. With the electrification of the system substan-
tial changes and improvements were made in the service.
The inereased rates, under the protection of the injunction,
were continued until sometime after this change was made.

Beginning in 1936, appellee, from time to time, filed vari-
ous tariffs with the commission by which certain changes
were made in its suburban rates. The rates fixed by these
tariffs are referred to in the tariffs themselves, and in the

. 41

record, as ‘‘experimental rates.’’ While these experi-
mental rates were changed from to time, they were al-
ways kept below the injunction level of 20 per cent in excess
of the rates in force immediately prior to January 1, 1926.
The commission did not interfere with appellee in charging
these rates or when the rates were cither increased or re-
duced by tariffs filed with the commission. The record shows
that these experimental rates were in force at the time this
proceeding was instituted.

On January 21, 1942, the Interstate Commerce Commis-
sion granted to the railroads throughout the country, an-
other general increase of 10 per cent in passenger rates
and fares within its jurisdiction. At that time a 10 per cent
increase in a substantial portion of appellee’s prevailing
intrastate commutation fares in its Chicago suburban area
would not raise those fares above the rates approved by the
decree, entered in 1928, in the injunction suit.. This order
of the Interstate Commerce Commission was a general
order applying to all railroads in the United States of the
class to which appellee belonged. That order is designated
in the record and will be hereafter referred to.as Ea Parte
No. 148,

On January 28, 1942, appellee filed its petition with the
lilinois Commerce Commission for authority to file tariffs,
on short notice, increasing by 10 per cent its intrastate
suburban commutation fares in its Chicago suburban area,
effective on the effective date of Ea Parte No. 148, which
was applicable to its interstate and through rates. The
commission refused to grant this authority. “{hereupon
tariffs were filed by appellee with the commission increas-
ing by 10 per cent its suburban commutation rates between
points within the State of Illinois. By the tariffs filed,
these rates were to become effeetive on March 8, 1942. At
the same time like applications and tariffs were filed, ef-
fecting the same character of rates, by a number of other
carriers operating in the Chicago area. The commission
entered separate orders suspending the proposed tariffs
and docketed each application separately. The tariffs filed
by appellee at that time are designated as Nos. 4258 and
4259. (All tariffs are referred to in this opinion by Illinois
Commerce Commission numbers, unless otherwise noted.)

42 ‘

At the same time appellee filed with the commission Sup-
plement No. 7 to Tariff No. 3755, which merely provided
for the cancellation of the then effective tariffs applicable
to such rates.

It is obvious that at the time Tariffs Nos. 4258 and 4259
were filed, appellee was of the opinion that the order of
the Interstate Commerce Commission, 2a Parte No. 148,
authorized it to increase all its rates, both intrastate and
interstate, to the extent of 10 per cent, including suburban
rates. The Illinois Commerce Commission, however, was

of the opinion that Ea Parte No. 148 did not apply to sub-.

urban rates. It based its orders denying authority to file
the tariffs on short notice, and its orders suspending the
proposed rates, on its construction that Ha Parte No. 148
did not apply to intrastate suburban rates.

Thereupon, Charles M. Thomson, as trustee of the prop-
erty of the Chicago and North Western Railway Company,
which was ong of the carriers against whom one of said
suspension orders was entered by the commission, filed a
suit in the Federal District Court for the Northern District
of Hlinois, to enjoin the commission, the Attorney General
and other public enforcement officers from taking any steps
to prevent said railway company from making effective the
proposed increase of 10 per cent, in its intrastate suburban
fares, in the Chicago area. By the complaint in that case
it was alleged, among other things, that La Parte No. 148
superseded the jurisdiction of the Illinois Commerce Com-
mission and that under said order the plaintiff was author-
ized to increase its intrastate suburban rates 10 per cent
ever existing rates, without the approval of the Tlinois
Commeree Commission. The purpose of the suit was to
«njoin the enforcement of the order of the commission dis-
approving such increase and suspending the proposed rates.

Upon a hearing by a statutory three-judge court, an in-
junction was granted as prayed for in the complaint. The
District Court held that the order of the Illinois Commerce
Commission, disapproving the proposed increase of 10 per
cent was invalid as to intrastate commutation fares, for the
reason that said order was in conflict with Ma Parte No. 148,
which it was held applied to such rates. By its deeree, it
perpetually restraihed and enjoined the commission and

43

the enforcement officers from enforcing the order and from
interfering with the collection of the fares prescribed by
the proposed tariffs, filed with the Illinois commission
based upon the 10 per cent increase.

’

An appeal from that decree was taken by the commission
to the Supreme Court of the United States. That court,
being in doubt as to the intended scope of the Interstate
Commerce Commission's order, Ba Parte No. 148, requested
that commission to file a brief in the cause, discussing its
construction of the meaning and application of said order.
In compliance with this request, such brief was filed. In
that brief the Interstate Commerce Commission took the
position that is order, Ea Parte No. 148, was not intended
and should not be construed to direct the 10 per cent in-
crease in existing Tlinois Intrastate commutation fares.
In discussing this brief, the court observed, ‘* Although the
brief is not wholly free from obscurity surrounding: the
order itself the Commission’s ultimate position that the
order is inapplicable to these particular commutation fares
is one which, under all the circumstances of the case, we
accept.” The Court held that Ba Parte No. 148 did not
apply to the intrastate commutation rates in the Chieago
urea, Involved in the ease. The decree of the District Court
sranting the injunction was reversed. Illinois Commerce
Com. v. Thomson, 318 U.S. 675, 63 S. Ct. 834.

The decision in the above ease obviously disposed of the
contention of appellee in this ease that Ea Parte No. 148
was applicable to the rates here involved and that under
that order it was entitled to make effective a 10 per cent
increase in its suburban commutation fares without author-
ity from the Illinois Commeree Commission. That ease
was decided April 12, 1943.

The order of the commission involved on this appeal
was entered on November 24, 1942. By the order the com-
nission found that the rates proposed in tariffs Nos. 4258
and 4259 were not just and reasonable and said tariffs
were permanently suspended and cancelled. It further
ordered that the schedule of rates of appellee on file with
the commission and in foree and effeet on Mareh 7, 1942,
he continued in effect until the further order of the eom-

44

mission. By the order, appellee was directed to publish,
post and file with the commission, effective on or hefore
December 30, 1942, appropriate supplements cancelling
Supplement No. 7 to Tariff No. 3755 and also cancelling
Tariffs Nos. 4258 and 4299.

Appellee next contends that the decree in the injunction
suit entered by the Federal Court in January, 1928, pro-
hibits the commission from interfering with it in raising
its intrastate suburban commutation rates to the level of
the rates approved by said decree. Tt further contends
that as to a large portion of such rates, which were in
effect on March 7, 1942, the increase of 10 per cent would
not raise the fares above the rates approved by the in-
junction decree. These are the rates covered by Tariff
No, $259.

As to approximately 20 per cent of its suburban commun.
tntion fares, prevailing on Mareh 7, 1942, which the in-
crease of 10 per cent would raise above the level of the
rates approved by that decree, being the rates covered by
Taritl No. 4258, appellee contends that, wholly apart from
ihe action of the Interstate Commerce Commission, by
Ky Parte No. 148, and entirely aside from the proceedings
in said injunetion suit, the evidence in this record justifies
the proposed increase of 10 per cent, which the commission
disapproved. In other words, appellee challenges the juris-
diction of the commission to make any order at all with
reference to the rates proposed in Tariff No, 4259, which
are within the injunction level. It asserts that the only
rates which it was required to justify are the rates pro-
posed by Tariff No, 4258, which it seeks to raise above
the level of the injunction. Tt further contends that even
though it be held that it also had the burden of justifying
the rates proposed in Tariff No. 4259, it has discharged
that burden by the evidence in this record.

Before entering upon a consideration of this and. other
Guestions in the case, it will be necessary to dispose of a
procedural contention raised by appellant. It is contended
that the commission was without jurisdiction to erant an
inerease in rates for the reason that appellee failed to
notify the Federal Emergency Price Administrator of the

: 45

pendency of the proceedings, as required by the amend-
ment to the Emergeney Price Control Act of 1942, passed
by the Second Session of the Seventy-seventh Congress,
and the regulations promulgated under said act. This
auendment to the Hmergency Price Control Act, which
became effective on October 2, 1942, contains the following
provision: **" Provided, that no common carrier or
other public utility shall make any general increase in its
rates or charges which were in effeet on September 15,
1942, unless it first gives thirty days notice to the President,
or such agency as he may designate, and consents to the
timely intervention by such agency before the Federal,
State, or municipal authority having jurisdiction to con-
sider such increase.”? Public Law 729—77th Congress—
Ynd Session; 50 UL S.C. A. 901; U.S. C. A. Congressional
Service, 1942, No. 9, p. 1202.

On October 14, 1942, the Director of Economie Stabiliza-
tion issued his Directive No. 1, in which he designated the
Price Administrator of the Office of Price Administration
asa representative of the Director of Meonomie Stabiliza-
tion, to receive notice of proposed increases in common ear-
riey or other public utility rates, to issue appropriate regu-
lations for the receipt of such notices and to intervene and
participate in proceedings before Federal, State and mu-
hicipal authorities, in connection with any proposed increase
insuch rates and charges.

In answer to this contention of appellant, appellee first
contends that it was not required to notify the Office of
Price Administration as provided in said act, for the reason
that the increase in rates which it sought was not a ‘‘gen-
eral inerease,’’ within the meaning of the Emergeney Price
Control Act, as amended on October 2, 1942. A reference
to the amendment discloses that by its broad language the
Congress conferred upon the President practically unlim-
ited administrative powers. In the exercise of those pow-
ers the Office of Price Administration on November 12,
i42, issued Procedural Regulation 11. Seetion 1300.902
of that regulation provides :

“General requremcnts with respect to notices. Thirty
(30) days before the effective date of a general increase

+

46

in the rates or charges of any common carrier or other
public utility, there shall be filed with the Transportation
and Public Utilities Division of the Office of Price Admin-
istration, Washington, D. C., two copies of notice of such
proposed increase, except as otherwise provided in’ para-
erapls (d) and (e) of section 1300.904. Such notices shall
he deemed to have been filed when received in the Office of
cneh Division. If authority for the establishment of any
euch increase is required by any regulatory ageney, notice
chall be given on or before the time such authority is sought
1) order that the Price Administrator may have timely
opportunity to intervene, but in no event shall such notice
he given less than 30 days before such proposed increased
rates or charges are to become effective. All notices shall
state the name and address of the Federal, State or mu-
nicipal authority having jurisdiction over the rates or
charges in question,

“Bach such notice shall contain a statement that the
common earrier or other public utility consents to the
timely intervention by the Price Administrator, on behalf
of the Director of Keonomie Stabilization, before the ed-
eral, State or municipal authority having jurisdiction to
consider such increase.

“One copy of each notice must be over the signature of
an exeeutive officer, a responsible traffic officer, or a duly
authorized attorney or agent of the ‘carrier or other public
utility. Duly authorized officers of corporate agents shall
sien on behalf of such agents. The person signing the
notice shall certify that the information contained therein
i Ort; err

65

tial basis in the evidence. Its finding that so long as ap-
pellee’s net revenues from the operation of its entire sys-
fem were sufficient to provide a reasonable return on its
system investment it was immaterial whether the revenue
derived from its suburban service was sufficient to pay
operating expenses incurred in that service or a fair re-
turn on the reasonable value of the property devoted to
that service, was against the manifest weight of the evi-
dence. Having proceeded upon this fundamentally erro-
neous basis, it logically reached the erroneous conclusion
that it could not consider an inerease in rates for appellee's
suburban service so long as the net revenue from the en-
tire system was sufficient to show that the whole system
was not operating at a loss. This conclusion makes it
unnecessary for us to consider any other questions pre-
sented which have not already been disposed of by this
opinion.

The commission having disregarded the evidence in the
record, as well as the basie and fundamental rules of law
applicable to the facts before it, its order cannot be sus-
tained. The order of the commission has no substantial
basis in the evidence. It is unreasonable and unlawful.
The judgment of the superior court of Cook county is
affirmed.

Judgment affirmed.

(6183)

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA34806415_2446%3A2. Public record. Not legal advice.